My Life, Our Times

by Gordon Brown

  Labour appeared to be making progress in 1985 and 1986, particularly after Neil launched his attack on the Trotskyist group Militant Tendency. As he delivered his famous speech denouncing Militant at the Labour conference in 1985, I watched Eric Heffer, the hard-left MP for Liverpool Walton, heighten the drama by storming off the stage. This played into Neil’s hands. Not only did Heffer walk off the stage, he walked into political oblivion. I joined Neil’s fight to expel Militant from the party.

  The 1987 election campaign, run by Bryan Gould and Peter Mandelson, was the first in which I had any national role – small as it was. ‘Labour won the campaign, but lost the election,’ it was later said. In fact, the reality was somewhat different. If you do not get the policy fundamentals right, no amount of good political presentation – from red roses to new anthems – can make up the difference. If the 1983 manifesto had been too long, the 1987 manifesto was a mere seventeen pages, set in a large bold type. It did not do enough to answer the concerns voters had about Labour’s position on defence, taxation and economic management.

  It was this election that taught me and my colleagues that we still had a long way to go to establish our economic credibility as a party of government. I spent my days travelling round the regions. I did only one national press conference – with Gerald Kaufman and Tony Blair. It did not go well. All the coverage Labour might have received from my employment initiatives was swept away by a comment Tony made alleging that Mrs Thatcher’s policies on private rented housing were the result of ‘an unchecked and unbalanced mind’. Michael Brunson, ITN’s savvy political editor, instantly asked if Tony was suggesting that the prime minister had psychiatric problems. I knew – everybody knew – that this was not what Tony meant, but the press reported his comment as a desperate gambit by an increasingly desperate party. Tony was despondent as he got pilloried; I told him these things happened and it would pass.

  In Scotland, Labour gained an additional nine MPs and increased its share of the vote by over 7 per cent. The Conservatives lost half their seats and it was now clear that they were a waning force north of the border. My own majority in Dunfermline East doubled to nearly 20,000. But across the UK, Labour secured only an extra twenty MPs. The Conservatives still held a parliamentary majority in excess of a hundred.

  The year before, I had published a biography of the Scottish socialist James Maxton, perhaps the most gifted orator of his day and, according to Churchill, the best parliamentarian of his time. In his review of the book, Michael Foot described Maxton’s rhetorical skills: ‘Until the deed was done no one could tell which instrument he would choose – laughter or tears. Like all the very greatest artists he was the master of both.’ He had taken the slums into Parliament, was one of the first to call for a National Health Service and a welfare state, and was labelled by some as the ‘Children’s Champion’. But the real message of my book was that to hold to an ideological purity at the cost of political impotence served no one. Labour – now destined to be out of power for another ten years – had to change even more radically if we were to return to government.

  First, I thought we had to widen Labour’s appeal and make it a mass-membership party through the recruitment of many of the country’s 5.5 million trade-union-levy payers – members of unions affiliated to Labour. For ‘this army of supporters now waiting in the wings’, I argued in an article, ‘individual membership should be inexpensive to buy and attractive to hold’. I followed this with a more detailed pamphlet a few years later, Making Mass Membership Work, focusing on an active, directed recruitment strategy in local communities. I was clear about the party’s uninviting culture: Labour needed to locate itself at the centre of community life. In my own constituency we had great success thanks to the work of my election agent, Alex Rowley, and a friend who died all too young, Helen Dowie. Having already doubled membership in the late 1980s, we set and met an ambitious goal of 1,500 members by 1993.

  I thought I could play my part in shaping change and decided it was the right time to stand for the shadow Cabinet. In these elections, deals were often made across the party’s regional factions that made no sense of the party’s ideological divisions. Some who would always have got a place on merit, like Gerald Kaufman, moved to the very top of the ballot because he was a master of sophisticated manoeuvring. Gerald elevated his campaign to such an art form that he was able to tell you how many times he had talked to each MP; indeed, he allocated each of his colleagues a quota of time-limited conversations over the course of the year.

  I had to broaden my support beyond an admittedly larger than usual Scottish constituency – now one-quarter of the Parliamentary Labour Party. I did so thanks to my friend Nick Brown, the Newcastle MP who was a genius in mastering the byzantine machinery and assembled a coalition that won me eighty-eight votes. I was elected joint eleventh on the ballot, a decent enough result for someone standing for the first time.

  While the election for the shadow Cabinet was in the hands of the Parliamentary Labour Party, the allocation of portfolios was in the hands of the leader. In the ensuing reshuffle, Neil appointed me shadow Chief Secretary to the Treasury, under John Smith, the new shadow chancellor. I spent the next year thinking through how to modernise Labour’s approach in the area that had become our Achilles heel – taxing and spending. None doubted our willingness to spend money, but too many doubted our capacity to spend prudently.

  I argued that we had to become wise spenders rather than big spenders. John Smith, also keen to transform Labour, developed a mantra of a Labour Party committed to economic stability. We were up against Nigel Lawson as chancellor and the now rising star John Major as Chief Secretary. A former whip, Major was also an expert in parliamentary tactics – and, although this is not how he is now best remembered, an adept Westminster operator. In the last stages of the Budget debate in the spring of 1988, for example, at a time when most MPs would normally be standing in the bars rather than sitting on the benches, he flooded the House of Commons with supporters to shout me down; they were louder than ever, having just come from the bars.

  Neil Kinnock continued to spearhead the efforts to make Labour acceptable, with reworked policies and a measured statement of aims and values. He insisted that we had to become more disciplined and more professional. The question, as he put it at the 1987 party conference in Brighton, was ‘whether this party wants to achieve victory or to settle for offering the British people nothing but sympathy’. We were moving ahead, when Tony Benn suddenly launched a challenge to Neil’s leadership. Eligible because he had returned to the Commons, Tony cobbled together enough nominations to stand. It was a classic case of tilting at windmills. Neil won by a landslide of 89 per cent. But since we always seemed to be looking inwards, out in the country we were failing to win support. In November 1988, a little over a month after the leadership contest, Labour lost the Govan by-election to the SNP. A majority of 19,509 in one of Labour’s safest Scottish seats gave way to an SNP majority of 3,554.

  The Budget of 1988, when Nigel Lawson infamously reduced the top rate of income tax from 60p to 40p, marked something of a turning point. On the spot, I concluded that Lawson had handed us a weapon that could eventually help us get back into power. As I pointed out at the time, 95 per cent of the British people would gain nothing; in one swoop, he had given billions to the wealthiest people in the country. As I said, ‘No Budget this century has given so much to so few.’

  Such a huge and offensive redistribution of wealth from poor to rich had economic consequences too. These were compounded when, the next day, Lawson did what he often did: reduced interest rates and then claimed the economy could afford this because his policies were working and inflation was under control. It was this kind of cynical ploy – the chancellor pronouncing favourably on his own economics and rewarding himself with an interest-rate cut – that was discrediting the conduct of monetary policy. In my own mind, I started to question Treasury control of interest rates and remarked to John Smith that
there could be a case for Bank of England independence. But Lawson had made a grave error. His tax cuts, followed by his interest-rate cuts, helped fuel an unsustainable housing boom which was eventually to bring recession.

  Everything was to change for me in October 1988. On the Saturday after our party conference, suffering from a severe headache, John Smith went to see his GP, who sent him straight to hospital. When a cardiogram failed to identify any problems, John went back to his Edinburgh home. The next day, while getting dressed, he suffered a heart attack. When I had been with John at the conference, he clearly was not 100 per cent well. Having been stricken, John was now instructed to take time off, cut out alcohol and lose weight. He would be off for months. Parliament was returning within a few days. Bryan Gould, the trade and industry spokesman, was the next senior person with an economics portfolio and the obvious stand in. But to my surprise, Neil asked me to take over temporarily as shadow chancellor. Throughout the next three months, I kept in close touch with John, visiting him frequently, but trying not to overburden him and simply getting on with the job in hand.

  My new role came just as interest rates started to rise and economic issues took centre stage. Within a few days of taking over, I had to confront Nigel Lawson across the Dispatch Box for the first time. Seven months ago, I said, he had proclaimed he was presiding over an economic miracle. What miracle? These had been seven months during which real interest rates and inflation had soared to among the highest in Europe; and every major forecast and assessment that the chancellor had given was proving to be wrong. He was wrong about inflation, wrong about interest rates, wrong about imports, wrong about savings, trade deficits and the money supply. And his response, I said, was to tell us that what we needed was self-discipline – not from him, of course, but from everyone else. I went straight for Mrs Thatcher: ‘Historians will be interested to know what special powers the chancellor has over the prime minister that she should witness these appalling errors and then describe them as brilliant, wonderful and marvellous.’

  The press coverage was positive. I was described as a new Labour star, and Conservative strategists were so annoyed that, on the day after my speech, a rising Tory MP, Tim Yeo, was instructed to introduce a Point of Order claiming that I had gone to Hansard and tried to doctor the transcript of my speech. I had done nothing of the kind.

  The Opposition can stage a debate almost every week in the autumn and Neil continuously put me on the front line during November. I again did battle with Lawson during the Autumn Statement. I was fortunate to be facing him in 1988. By now, after five years as chancellor, he came across as overconfident, complacent and growing indolent – perhaps even stale. Up against him, any thirty-seven-year-old might look dynamic and fresh. My accidental promotion pushed me from eleventh place to top position in the next shadow Cabinet elections in November.

  John Smith resumed his shadow chancellorship in February 1989. Back to my old post as shadow Chief Secretary, I thought I had the time to write a book about the right-wing drift of the Tories. The title was Where There is Greed. Looking back on this, I missed a chance: while it was important to reveal what was wrong with the Tories’ policies, I should have done more to define New Labour, set out a detailed agenda for change and provide a stronger intellectual framework for the modernisation movement within the party. Old-style national corporatist strategies, such as nationalisation, exchange controls and capital controls could not now work in an increasingly globalised economy. We had to move on from them. Labour had to be the party of aspiration but, even after Neil’s major reforms, it was still seen as a party that prevented people fulfilling their ambitions.

  The 1989 conference was to mark the completion of the Kinnock policy review process. In advance, Neil published Meet the Challenge, Make the Change, a comprehensive document of seven chapters covering every aspect of party policy. It is best known for the decision to keep Britain’s nuclear deterrent. By 1989 we had abandoned the three most unpopular policies of our decade out of power – unilateral nuclear disarmament, old-style nationalisation and high taxation. Thanks to his leadership, Neil’s new policies were approved with relatively little dissent and they would form the basis of the 1992 election manifesto.

  In November 1989 Neil promoted me to the trade and industry brief. I wanted to make the case for a modern industrial strategy for Britain but first I had to deal with a thorny problem: our continuing commitment to renationalising telecommunications. It was not only unpopular; privatisation was all but irreversible because of the fast-changing nature of the industry and the fact that so many millions had already bought shares in the privatised companies. By now, I was thinking of an alternative policy which would secure benefits for the country through regulation without the expense of renationalisation. In due course this was to lead to my proposal for a windfall tax on the privatised utilities to fund a welfare-to-work agenda.

  Being the trade spokesman offered huge openings in the House of Commons because of the mistakes of our Tory opponents which led to a high turnover of Trade and Industry Secretaries. The first I was up against, the anti-interventionist Nicholas Ridley – who was ultimately forced to resign after saying that giving up sovereignty to the European Union was as bad as giving it up to Adolf Hitler – was well known as a heavy smoker. To make the point that he regarded his departmental brief as that of abolishing his department, I told the House that his desk had no in tray, no out tray – only an ashtray.

  The next two years saw some dramatic events on the floor of the Commons as Mrs Thatcher’s leadership faltered and then ultimately imploded. She was already under pressure from Scotland because of the flat-rate poll tax which was leading to demonstrations and potentially riots. None of the parliamentary dramas we would see under our own government would ever match the no-holds-barred Tory civil war that brought the resignation of Nigel Lawson as chancellor and the denunciation of Mrs Thatcher by Geoffrey Howe in his resignation speech as deputy prime minister in November 1990. There followed quickly the rejection of the prime minister who had brought the Conservatives back to power. We were well positioned to run against her in 1992. John Major’s sudden premiership – his shift to the centre and his rags-to-riches story – created a new set of challenges for which Labour was less prepared.

  Tony and I made a long visit to Australia in 1991, not just because we wanted to see a Labour government in action – we toured eight cities and met the Australian prime minister and treasurer, Bob Hawke and Paul Keating, and other future leaders too – but because we were rethinking some of the basic assumptions which animated progressive moments. On the long plane journey out, Tony and I started with a blank sheet of paper and tried to set down from first principles what a modern social democracy would look like. The world was changing. Both Tony and I were in no doubt that we had to endorse markets, competition and the essential role of the private sector in achieving economic growth, and that we also had to change from a tax-and-spend party that appeared willing to borrow, no matter the circumstances. Neil Kinnock had fought a long battle against those who opposed nuclear weapons, council-house sales and public-private partnerships to rebuild our infrastructure, and had to convince doubters that it made no sense to renationalise British Telecom.

  Tony and I recognised that there were also such things as market failures. Effective as markets are as mechanisms for creating material prosperity, they come up against limits. Markets could not on their own account address pollution or deliver public goods, and even if the market could achieve a much-vaunted equilibrium – balancing demand and supply – that did little to counter inequality. Markets did not have the inbuilt mechanisms – that only government can provide – to correct their tendency to self-destruct. Getting the balance right between the public and private sectors and, if possible, ending the self-defeating territorial stand-off between the two was the challenge. We had to recognise that while markets need rules to underpin them, the public sector can be paid for only by a productive market secto
r. In future, public spending had to be judged not by how much we spent, but by what it achieved. On all of this, Tony and I agreed and we were to follow through these ideas in party policy reforms a year or two later. Where we found it more difficult to agree was on what to do about poverty and inequality. Both of us favoured promoting opportunity and felt that equality of opportunity was a goal that no one was yet delivering. But on equality I think it is fair to say that I gave more emphasis to prosecuting a war on poverty and addressing inequalities of income and wealth.

  More immediate issues had to be tackled on our return. I was sure we should fight the 1992 general election by focusing on the state of the economy. Unemployment was rising sharply, the recession hitting hard, and higher mortgages were driving people into negative equity. At last, I believed, we could successfully attack the Conservatives for their mismanagement of the economy and credibly position Labour as the party of economic competence. None of this, I am afraid, happened.

  Only once have I made a private forecast about the outcome of a general election that was predicted to be close – the 1992 election, when I was unhappily convinced the Tories would win. I anticipated a Conservative majority of thirty. I was too pessimistic: in the end, Major had a majority of twenty-one. The expected Labour breakthrough never happened. Why? Because we failed to stress the one issue that mattered most to the country. In Britain, too, as with Bill Clinton’s successful presidential campaign in 1992, it should have been a version of ‘it’s the economy, stupid’ – as I argued, ‘jobs and the economy first’.